HOUSE OF COMMONS CANADA ISSUES AND CHALLENGES RELATED TO LOCAL TELEVISION Report of the Standing Committee on Canadian Heritage Gary Schellenberger, MP Chair JUNE 2009 40th PARLIAMENT, 2nd SESSION The Speaker of the House hereby grants permission to reproduce this document, in whole or in part for use in schools and for other purposes such as private study, research, criticism, review or newspaper summary. Any commercial or other use or reproduction of this publication requires the express prior written authorization of the Speaker of the House of Commons. If this document contains excerpts or the full text of briefs presented to the Committee, permission to reproduce these briefs, in whole or in part, must be obtained from their authors. Also available on the Parliamentary Internet Parlementaire: http://www.parl.gc.ca Available from Communication Canada — Publishing, Ottawa, Canada K1A 0S9 ISSUES AND CHALLENGES RELATED TO LOCAL TELEVISION Report of the Standing Committee on Canadian Heritage Gary Schellenberger, MP Chair June 2009 40th PARLIAMENT, 2nd SESSION STANDING COMMITTEE ON CANADIAN HERITAGE CHAIR Gary Schellenberger, M.P. VICE-CHAIRS Pablo Rodriguez, M.P. Carole Lavallée, M.P. MEMBERS Charlie Angus, M.P. Rod Bruinooge, M.P. Dean Del Mastro, M.P. Ruby Dhalla, M.P. Shelly Glover, M.P. Nina Grewal, M.P. Roger Pomerleau, M.P. Scott Simms, M.P. Tim Uppal, M.P. CLERK OF THE COMMITTEE Richard Dupuis LIBRARY OF PARLIAMENT Parliamentary Information and Research Service Marion Ménard Michael Dewing iii THE STANDING COMMITTEE ON CANADIAN HERITAGE has the honour to present its SECOND REPORT Pursuant to its mandate under Standing Order 108(2), the Committee has studied the Evolution of the Television Industry in Canada and its Impact on Local Communities and has agreed to report the following: v TABLE OF CONTENTS INTRODUCTION ............................................................................................................. 1 PART 1: COMMITTEE MANDATE .................................................................................. 3 PART 2: LOCAL TELEVISION ....................................................................................... 5 2.1 The place of local television in the system ........................................................... 5 2.2 Importance of local television ............................................................................... 6 PART 3: THE CRISIS IN LOCAL TELEVISION ............................................................ 9 PART 4: TESTIMONY HIGHLIGHTS ........................................................................... 11 4.1 Fee for carriage .................................................................................................. 11 4.2 The Local Programming Improvement Fund ...................................................... 14 4.3 CBC/Radio-Canada ........................................................................................... 16 4.4 Licence fees under Part II of the Broadcasting Act ............................................ 16 4.5 Local programming obligations and Canadian content ...................................... 17 4.6 Distant signals .................................................................................................... 20 4.7 The shift to digital .............................................................................................. 22 4.8 Community Television ........................................................................................ 24 4.9 Aboriginal Television .......................................................................................... 27 4.10 Educational Television ..................................................................................... 29 THE COMMITTEE'S RECOMMENDATIONS ............................................................... 31 APPENDIX A: SUGGESTED STUDY THEMES .......................................................... 35 APPENDIX B: LIST OF ABBREVIATIONS ................................................................... 37 APPENDIX C: LIST OF WITNESSES ........................................................................... 39 APPENDIX D: LIST OF BRIEFS ................................................................................... 47 REQUEST FOR GOVERNMENT RESPONSE ............................................................. 49 vii DISSENTING OPINION OF THE CONSERVATIVE PARTY OF CANADA .................. 51 SUPPLEMENTARY OPINION OF THE BLOC QUÉBÉCOIS ....................................... 55 viii INTRODUCTION The Committee would like to acknowledge the participation and generosity of the witnesses who took part in our study. Representatives of the broadcasting industry agreed, often with little notice, to appear before us and share their knowledge and expectations regarding local television. We are most grateful to them. Though there is a debate about the nature and the extent of the changes in the Canadian broadcasting industry, the Committee reiterates the importance for Canada of having strong local media. As representatives of the people, we are in a position to recognize the role that local media play in our respective communities. 1 PART 1: COMMITTEE MANDATE In early 2009, the effects of the world economic downturn combined with long-term structural changes affecting conventional television broadcasters, led to the closing of a number of local television stations and/or news operations. In February, CTV Television Inc. announced it would not seek to renew the licences for two A Channel stations — CKNX-TV in Wingham and CHWI-TV in Wheatley and Windsor in Ontario — when they expire at the end of August and that it would either sell or close CKX- TV in Brandon, Manitoba.1 In early March, CTV cancelled A Channel morning shows produced in Victoria, London, and Barrie, and the evening, late-night, and weekend newscasts produced in Ottawa.2 Also in February 2009, Canwest Global Communications said it was considering selling some of its conventional television stations, including CJNT-TV in Montreal (Quebec), CHCH-TV in Hamilton (Ontario), CHCA-TV in Red Deer (Alberta), CHBC-TV in Kelowna (B.C.), and CHEK-TV in Victoria (B.C.).3 Meanwhile, CBC/Radio-Canada said it would have to cut services, programs, and people in order to bridge a short-term financing gap brought about by the economic crisis.4 On March 19, it announced it would cut executive salaries and bonuses, offer voluntary retirement incentives, and try to sell assets.5 Earlier, in June 2008, the Canada Radio-television and Telecommunications Commission (CRTC) approved the acquisition of bankrupt TV network Télévision Quatre- Saisons (TQS) by Remstar Diffusion Inc. Remstar wanted to significantly reduce news programming at TQS and, as a short-term measure, the CRTC allowed it to offer a two- hour weekly current events analysis show in Montreal and Quebec City and one hour of 6 news each week in Sherbrooke, Trois-Rivières and Saguenay. 1 “CTV cuts 118 jobs at A Channel stations,” The Toronto Star, March 3, 2003, http://www.thestar.com/ business/article/595756. 2 Etan Vlessing, “A Channels chop local morning and weekend news shows,” Media in Canada, March 4, 2009, http://www.mediaincanada.com/articles/mic/20090304/achannels.html?__s=yes. 3 “Canwest may sell TV stations,” CBC News, February 5, 2009, http://www.cbc.ca/canada/british-columbia/ story/2009/02/05/canwest.html. 4 CBC/Radio-Canada, CBC/Radio-Canada’s response to Greg Weston’s article: ’CBC wants more. In hard economic times others cut, the public broadcaster begs’, The Sun newspaper chain, February 22, 2009,” 26 February 2009, http://www.cbc.radio-canada.ca/media/facts/20090226.shtml. 5 Wojtek Dabrowski, “CBC to trim salaries, bonuses,” The Globe and Mail [Toronto], March 19, 2009, http://www.theglobeandmail.com/servlet/story/RTGAM.20090319.wcbc0319/BNStory/Entertainment/home. 6 “CRTC clears Remstar’s purchase of TQS,” The Gazette [Montreal], June 27, 2008, http://www2.canada.com/ montrealgazette/news/business/story.html?id=b29beed6-6343-40dc-93e4-2c9d1d30bd94. 3 As a result of these events, on March 11, 2009, the Committee agreed: That, in light of the economic downturn, this Committee conduct a study at its earliest convenience on the future of television in Canada and the impact of the economic crisis on the industry in our local communities, beginning with calling to appear on March 25, 2009 from the CRTC: Konrad von Finckenstein, Chairman, Michel Arpin, Vice-Chairman of Broadcasting, and Peter Foster, Director General of Television Policy and Applications, to provide a briefing examining: 1) impacts on broadcasting in terms of the following key issues that are emerging: a) the upcoming transition to digital programming, b) the financial pressures on local and Canadian programming, c) the need to maintain diversity of voices in media markets across Canada, d) the effectiveness of cultural development funds on ensuring Canadian voices are able to compete in a challenged television landscape, and 2) the upcoming public hearing on License Renewals for Private Conventional Television Stations listed in Broadcasting Notice of Consultation CRTC 2009-113 in light of the recent economic crisis and technological innovations, and that the Committee report the findings of this study to the House.7 The Committee also approved a set of study themes, which included funding (financial pressures, the decrease in advertising, changing viewing habits, and revenue streams), fee for carriage, the transition to digital programming, the role